It’s easy to understand why ministries believe they are less likely to become a victim of a financial crime. This is because of the great trust they have for their staff. And while that trust may have been earned or even warranted because of their common Christian bond, internal controls are still necessary. Proper controls don’t say “We don’t trust you.” Instead, they say, “We want to protect you.” Not only do they remove the opportunity for any misappropriation of funds, they also catch errors and protect staff from innuendo and false accusation if a loss is incurred.
Here are six key elements of internal controls for churches and ministries:
1. Maintain clear organizational structure, including proper channels for reporting suspected improprieties.
2. Keep policies and procedures that are clearly written, current, and accessible. This leaves no question about authority, and helps part-time and volunteer staff carry out activities and continue them during periods of turnover.
3. Implement separation of duties. Some of the most important separation of duties for ministries include handling donations and being responsible for recording the receipts in the accounting records. A key component is the routine review and reconciliation by someone other than the preparer or transactor to determine that transactions have been properly processed.
4. Practice dual control over all cash donations. Two persons should be assigned counting responsibility for all cash and for deposit preparation. The cash counters should not also prepare the deposits, and all positions should be rotated periodically.
5. Require dual control of cash until it is delivered to the bank or a courier. A locked safe that requires two distinct individuals to remove the cash keeps it secure.
6. Implement dual control for online banking systems. Individuals who create files should be different from those who release files for processing.
What other financial controls has your ministry found helpful?